Uniswap founder Hayden announced on X that the technical design for auto-compounding liquidity is his personal contribution to the platform pools.trade. The design works by having liquidity positions deposited into a smart contract. The core rule is that any person can withdraw the full amount of unclaimed fees attached to a given position, but only on the condition that they increase the size of that liquidity position by 0.2%. Consequently, fees accumulate over time. When the value of accumulated fees exceeds 0.2% of the liquidity in the position, searchers receive a natural financial incentive to add that 0.2% in liquidity to the pool and then collect the fees. This mechanism is based on the Uniswap token jar concept, and Hayden noted it can also be applied to automatically compound ordinary Uniswap LP positions. For that reason, he said, he will be adding the feature to the project's roadmap.
Hayden, the founder of Uniswap, shared a technical design on X that aims to enable auto-compounding of liquidity positions. He described the design as his personal contribution to pools.trade.
The mechanism works like this: a liquidity position is deposited into a smart contract. Under the contract's rules, anyone can withdraw all unclaimed fees from the position, but only if they first increase the size of that liquidity position by 0.2%. As a result, fees grow over time. Once the value of those fees exceeds 0.2% of the position's liquidity, searchers are naturally incentivized to add 0.2% in liquidity to the pool and claim the accumulated fees.
The design builds on the Uniswap token jar and can be adapted to auto-compound regular Uniswap LP positions as well. Hayden said he plans to add the feature to the roadmap.
This article was originally published by Bit.Fan. For more cryptocurrency news and market insights, visit www.bit.fan. Disclaimer:
The market information, project data, and third-party content displayed on this platform are for industry information sharing only and do not constitute any form of investment advice or return commitment.
Cryptocurrency trading carries high risks. Users should fully assess their risk tolerance and make independent decisions. All profits, losses, and legal responsibilities are borne by the users themselves.
